Analysis says surplus is already spent

An analyst with the Legislative Services Agency says the 330-million dollar surplus on the books when the state fiscal year ended June 30th is already spent. The money’s either been funneled into a special “rainy day” account or used to refill other state accounts from which lawmakers have borrowed over the years.

Senator Bob Dvorsky, a Democrat from Iowa City who’s co-chair of the Senate Appropriations Committee, says lawmakers may have no choice but to raise the state cigarette tax next year to fulfill promised spending increases for schools and other priorities.

Dvorsky says he comes from Johnson County where people are very health-conscious, and he says a doctor there told him we ought to increase the cigarette tax, “and he doesn’t care if we throw the money in the Iowa River.” Dvorsky thinks something else should be done with the money, but agrees a higher tax might keep kids from smoking.

It’ll be December before lawmakers learn how much the state expects to collect in tax revenue next year, but Dvorsky says things will not be as grave as they look now. “I don’t think we’re swimming in money but I think you can dip your toes in it a little bit,” he says. Lawmakers this week got a look a more detailed state budget for next year, which includes automatic spending growth around 455-million dollars and that doesn’t factor in state pay raises and higher costs for medicine and fuel.

Representative Scott Raecker, a Republican from Urbandale who is chair of the House Appropriations Committee, said it’s a fairly sure thing revenues won’t rise that much. “I’m not prepared today to tell you that we’re looking at cuts,” he cautions, but Raecker says there’s a “limited amount of revenue stream.” He says no matter who’s elected to succeed Tom Vilsack as governor, both candidates have laid out plans that include more spending, and that money’s going to need to “come within a framework from the dollars that we have available.”

Raecker says a cigarette tax hike would only be a temporary fix because when the tax goes up, the number of smokers goes down. He doesn’t look at cigarette taxes as “a revenue-generating issue and that we should build our budget on that, I would not be an advocate for that.” Raecker says if lawmakers want to tackle it as a healthcare issue they could, but shouldn’t look at it as the answer to budget issues.

Raecker says it’s too early to say if the legislature will have to cut programs to balance next year’s state budget. But Raecker admits there will be a gap between how much the state collects in taxes and how much he and other lawmakers have already promised to spend on education and other priorities.